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GIA should end its state of denial
I REFER to the response to my letter of March 23 by General Insurance Association (GIA) executive director Mark Lim.
GIA has not answered the questions I raised on insurers' profits in a growing business and what the industry is doing to control its own cost structure, which is outdated and expensive.
The average annual growth of vehicle population is about 6 per cent to 7 per cent, while according to the latest statistics from the Monetary Authority of Singapore (MAS), motor insurance premiums grew 18 per cent last year as compared to 2007. In other words, insurance premiums per vehicle tripled over the same period.
At a time when GIA is crying that motor losses are hurting them, the major motor insurers all grew their share of the motor insurance business. AXA grew by 6 per cent, NTUC Income by 5 per cent and AIG by 4 per cent. This information is publicly available on the MAS website.
Mr Lim pointed out that following the implementation of the Motor Claims Framework (MCF), the number of claims has gone up by 27 per cent. Naturally so, when you have to report even the most trivial accident. Assuming there are 1,000 claims reported and the cost to administer each claim is $100, that would add $100,000 to the total cost without any real benefit. The actual number is likely to be much higher.
Mr Lim may like to believe that the MCF is working well and has been accepted as a useful practice by the motoring public. But judging by the responses from the public, this is far from the reality and GIA is in a state of denial.
We understand the need for motor insurers to make a decent profit. But GIA should stop blaming others for its woes. First, it was the fault of consumers, then it was the workshops, followed by lawyers and doctors. Now, it is everybody else's fault except the motor insurers'. When will the motor insurers start taking responsibility for their own actions?
Patrick Tan
I REFER to the response to my letter of March 23 by General Insurance Association (GIA) executive director Mark Lim.
GIA has not answered the questions I raised on insurers' profits in a growing business and what the industry is doing to control its own cost structure, which is outdated and expensive.
The average annual growth of vehicle population is about 6 per cent to 7 per cent, while according to the latest statistics from the Monetary Authority of Singapore (MAS), motor insurance premiums grew 18 per cent last year as compared to 2007. In other words, insurance premiums per vehicle tripled over the same period.
At a time when GIA is crying that motor losses are hurting them, the major motor insurers all grew their share of the motor insurance business. AXA grew by 6 per cent, NTUC Income by 5 per cent and AIG by 4 per cent. This information is publicly available on the MAS website.
Mr Lim pointed out that following the implementation of the Motor Claims Framework (MCF), the number of claims has gone up by 27 per cent. Naturally so, when you have to report even the most trivial accident. Assuming there are 1,000 claims reported and the cost to administer each claim is $100, that would add $100,000 to the total cost without any real benefit. The actual number is likely to be much higher.
Mr Lim may like to believe that the MCF is working well and has been accepted as a useful practice by the motoring public. But judging by the responses from the public, this is far from the reality and GIA is in a state of denial.
We understand the need for motor insurers to make a decent profit. But GIA should stop blaming others for its woes. First, it was the fault of consumers, then it was the workshops, followed by lawyers and doctors. Now, it is everybody else's fault except the motor insurers'. When will the motor insurers start taking responsibility for their own actions?
Patrick Tan
